Mobile WiMax Faces Struggle

Vendors hoping to cash in on the hype surrounding future development of mobile WiMax products may be set for a harsh dose of commercial reality, according to the latest Unstrung Insider report.

The report -- "Mobile WiMax: Who Goes Where?" -- claims that market developments and competing technologies could strangle the potential of 802.16e products by the time such kit is finally available.

In contrast to fixed WiMax products, which are based on the Institute of Electrical and Electronics Engineers Inc. (IEEE)’s 802.16-2004 standard and expected for commercial launch later this year, mobile WiMax is focused on the concept of portable and mobile broadband services. The IEEE is expected to ratify the 802.16e standard by the end of 2005, with certification testing and product availability slated for the second half of 2006 at the earliest.

The enormous interest already generated in WiMax technology has led to a bevy of chipset developers and infrastructure vendors announcing 802.16e product plans. Names in the frame include Airspan Networks Inc., Alcatel (NYSE: ALA; Paris: CGEP:PA), Alvarion Ltd. (Nasdaq: ALVR), Intel Corp. (Nasdaq: INTC), LG Electronics Inc. (London: LGLD; Korea: 6657.KS), Nortel Networks Ltd. (NYSE/Toronto: NT), and Samsung Corp..

Despite the high-profile backing, report author Gabriel Brown believes the technology faces a number of major challenges.

“Perhaps the biggest barrier to the adoption of mobile WiMax is the lack of available spectrum,” writes Brown. “It’s a tough problem -- and one that isn’t likely to be resolved soon.”

Brown notes that the spectrum bands around 3.5GHz are often only licensed for fixed use, and portability is not currently allowed in some countries. “Spectrum liberalization is a proposition fraught with both political and commercial challenges. As a result, it’s hard to envisage near- or medium-term deployments of mobile WiMax outside of the U.S. and Korea.”

The report also warns that mobile WiMax’s most viable target market could prove to be low-mobility (portable), medium-speed (~0.5 Mbit/s) services, potentially putting it in conflict with fixed WiMax. “Apart from rare exceptions (Korea), we don’t expect to see nationwide, or even many city-wide, mobile WiMax networks rolled out for mass-market services in either the near- or medium-term.”

Furthermore, by the time WiMax is commercialized, it will be competing with enhanced 3G systems -- such as HSDPA and CDMA 2000 1x EV-DO Rev A -- that are expected to improve the data speed of existing cellular technologies.

“The conclusion, then, is that for all its promise, mobile WiMax will have difficulty finding a market big enough to generate the economies of scale that will permit it to truly thrive.”

— Justin Springham, Senior Editor, Europe, Unstrung

The report, Mobile WiMax: Who Goes Where, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

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